EKO Asset Management Partners recently landed a big one. In
January the New Yorkbased investment management and
advisory firm shared in a $53 million grant from Bloomberg
Philanthropies that comes with a unique challenge: Figure out
how investors
can profit from helping to tackle chronic overfishing. Since
2012, EKO has been exploring ways of encouraging sustainability
reforms to industrial and smaller-scale fisheries by luring
private capital. Better management of the worlds fish
stocks could grow their populations by more than half and boost
yields by up to 40 percent, according to the journal
Science.

Over the next two years, the Bloomberg funding will support
EKOs work with U.S. environmental groups Oceana and Rare
to design and establish financing mechanisms that can help to
improve fisheries practices in Brazil, Chile and the
Philippines. The firm is one of a handful of financial
institutions that are teaming up with nonprofits to pull investors
into a nascent market known as conservation finance.

Jason Scott, co-founder and partner at EKO, says he and his
project colleagues are focusing on three strategies to make
money from protecting fisheries. First, they will offer a
bondlike vehicle to back practices such as use of nets that
catch fewer unwanted fish. The second strategy is financing to
help small-scale fishing operations buy cold storage and other
revenue-boosting equipment, and the third involves
private-public partnerships that finance state investment in
better science, monitoring and enforcement. Investors
would earn a share of revenue and taxes or other fees.

Much of EKOs fisheries research is based on its
previous work, funded by the New Yorkbased Rockefeller
Foundation, in green infrastructure. Scott believes that
environmental conservation problems such as the overfished
oceans are teeming with profit opportunities overlooked by
traditional investors
who dont understand the science,
regulation and policy involved. That lack of
awareness creates an opportunity for investors
who want to dig deep into certain areas, he says.

Devoted to investments that help preserve ecosystems for the
long term, conservation finance sees about $10 billion in
annual investment and spans sustainable timberland, agriculture
and aquaculture; wastewater treatment; and freshwater
protection, according to a January report by Credit Suisse
Group, the World Wildlife Fund and consulting firm McKinsey
& Co. To meet environmental needs the market must grow to
20 to 30 times its current size, or between $200 billion and
$300 billion in annual investment, the report estimates.
Assuming that philanthropic and government contributions at
least double in the near term, its authors say the gap would
close if every high-net-worth individual, retail investor and
institutional investor dedicated 1 percent of their portfolios
to conservation finance.

The markets multifariousness has held it back,
acknowledges John Tobin, Credit Suisses Zurich-based
global head of sustainability and a co-author of the report.
That doesnt mean there cant be investable and
very profitable products in the area of conservation
finance, says Tobin, who calls for more thinking on the
subject. Protecting species and supporting protected
areas has been a philanthropic endeavor until now. I dont
think many people have approached the topic saying, Hmm,
environmental conservation: Theres money to be made
here.

This underdevelopment has fueled a perception that the
market is risky, says Melissa Moye, Washington-based director
of conservation finance planning and design for the WWF.
Theres a lot of variety without a lot of standard
metrics for understanding what these investments might
yield, Moye explains. We need simple financial
solutions that can be standardized. As part of the
Bloomberg-funded fisheries project, EKOs Scott says,
his firm will publish investment blueprints for
strategies that it thinks will adequately finance sustainable
fisheries in the three target countries. Our goal is to
put these ideas into the public domain and have investment
managers, including ourselves, try to raise funds around the
ideas.  

Partner Content

An allocation to international bonds exposes Target Retirement Fund investors to an asset class thats not only influenced by different interest rate and inflation dynamics than U.S. bonds, but which also provides a larger opportunity set of credits.